WASHINGTON — The latest tariffs President Donald Trump plans to impose on Chinese goods would cost U.S. households an average of $200 a year, some economists estimate, and would start to bite consumers and retailers just as the holiday shopping season begins.
That cost would come on top of the roughly $830 cost imposed per household from Trump's existing tariffs, according to a New York Federal Reserve analysis.
Trump plans to tax $300 billion of Chinese imports at 10% starting in September with the goal of accelerating trade talks with Beijing to favor the United States. The new tariffs would be in addition to 25% tariffs Trump has imposed on $250 billion in Chinese products. Those are mostly industrial goods. By contrast, the new tariffs would target products used by American consumers, like shoes, clothing and cellphones.
By Friday, Trump's new planned tariffs had triggered worries, especially among retailers, about the consequences. Retail stores, many of which have been struggling, would have to make the painful choice of either absorbing the higher costs from the new tariffs or imposing them on price-conscious customers.
Additionally, China has signaled the likelihood of imposing counter-tariffs on U.S. goods, which would hit American exporters. The stock market sold off sharply on Friday, in part over concerns about the effect on corporate profits.
For retailers already feeling pressure, the higher prices would hit hard just as the critically important holiday shopping season was getting under way.
Some companies are considering moving up their delivery of goods before the new tariffs take effect. Isaac Larian, CEO of Los Angeles-based MGA Entertainment, which makes the popular L.O.L. doll, said the company will be accelerating shipments from China to the U.S. ahead of the Sept. 1 deadline - and will pay an extra $300 to $400 more per shipping container to do so.
He envisions having to raise prices 10 percent across his entire toy line.
"A lot of consumers can't afford it, and demand will go down," Larian said.
The Trump administration has publicly denied that consumers would be significantly harmed by the tariffs.
"Any consumer impact is very, very small," Larry Kudlow, director of the National Economic Council, told reporters Friday.
But based on estimates from Oxford Economics, the planned tariffs would cost $200 per household. This would be in addition to the estimated $831 per household cost from the existing tariffs.
Taken together, the tariffs would more than wipe out the savings a middle-class household received from Trump's 2017 income tax cuts. The average tax filer earning between $50,000 and $75,000 paid $841 less in taxes last year, according to Congress' Joint Committee on Taxation.
Many economists forecast that the proposed tariffs would shave about 0.1% off economic growth but that the real risk is a further escalation and side effects that could be devastating.